Better result than Bjarni's path

Central Bank Governor Ásgeir Jónsson says yesterday's news on a possible agreement between the state and pension funds on the settlement of the IL Fund is good news and better than the conclusion to go with the fund in bankruptcy, as had previously been planned with the associated risks.

This was among those stated at an open meeting of the Economic and Business Committee, which discussed the last publication of the Central Bank's monetary policy, the status of monetary policy and various challenges that are currently facing it.

Settlement of up to 651 billion

Arna Lára Jónsdóttir, chairman of the committee and MP for the Social Democratic Alliance, asked Ásgeir about his position on the proposals that the IL Fund and the Ministry of Finance presented, which emerged following the work of the 18 Pension Funds for a consultation committee, which has claims against the IL Fund.

It was proposed that the IL Fund and the state will hand over bonds to creditors of ISK 540 billion, other securities of ISK 38 billion, cash in currency up to ISK 55 billion and ISK 18 billion in Icelandic krónur, totaling assets of ISK 651 billion.

Better conclusion than to go with the fund in bankruptcy

Asgeir replied that he considered such a settlement to be positive. « As we see, this settlement with the Housing Financing Fund is good news and to some extent a better conclusion than to go with the fund in bankruptcy as intended, » said Ásgeir.

He referred to the ideas of former Minister of Finance Bjarni Benediktsson, who had proposed a plan for the proposal of a bill in Althingi which had authorized the winding-up and settlement of the IL Fund, but the pension funds did not accept that proposal and it was likely that such a route had ended up in lawsuits.

Believes the route does not affect the interest rate reduction process

Ásgeir says that with the new route, bonds are being issued that will be selling and that it is good for the pension fund to clear the current shares of the IL fund from the portfolio and delete the risk. He says this news is, in essence, is relatively good news.

Then Ásgeir said that he did not see that the statements and the state's issuance of new bonds would affect the bank's interest rate reduction process, at least not in the short term. Since November, the Bank has lowered its policy rate from 9.25% to 8% and said Ásgeir at the meeting expected a further reduction in inflation and that the bank tried to lower interest rates at the same time.